President Biden and President Kevin McCarthy reached an agreement on Saturday to raise the debt ceiling while imposing new restrictions on federal spending. If passed by Congress, it will end a partisan gridlock and avert a potentially devastating national default.
The deal will not only resolve the high-octane dispute over debt and spending problems that has gripped Washington for weeks, but it will also implement major changes in environmental permits, labor requirements for social safety net programs, and Internal Revenue Service tax enforcement.
The deal, described as an agreement in principle that was cemented during a phone call between Mr. Biden at Camp David and Mr. McCarthy in Washington, has yet to be translated into formal legislative language before being considered final. Details were only starting to filter through on Saturday night and many questions remained unanswered.
But here are some suggestions based on the information initially made available.
The debt ceiling would be raised until 2025, after the next election.
The federal government hit the $31.4 trillion debt ceiling set by law in January, but the Treasury Department used various accounting tricks to avoid breaching it. Treasury Secretary Janet L. Yellen said Friday that her department will exhaust those measures by June 5, by which time the government will be unable to meet its obligations.
The deal signed by Biden and McCarthy would raise the debt ceiling for two years to take it beyond the 2024 election, so neither would have to address the issue again in the current term. The Republicans had originally proposed a year. Both sides expect to win the 2024 election and be in a stronger political position when the cap is hit next time.
Domestic spending would be limited, but not as much as Republicans wanted.
Mr. McCarthy’s Republicans have insisted that any increase in the debt ceiling be conditional on spending cuts, so the deal reached with Mr. Biden would limit some programs to the same two-year duration for which the debt ceiling would have been lifted up. Republicans had originally sought a 10-year period for spending limits, but agreed to a shorter horizon.
The deal keeps non-defense spending in 2024 at roughly the level of 2023 and increases it by 1 percent in 2025, in part by redirecting funding from other programs. Among other things, the deal would cut about $10 billion from the $80 billion Mr. Biden previously secured to help the IRS go after wealthy tax evaders, and use that money to preserve national programs that would otherwise have been cut yourself.
Some of the billions of dollars left over from the Covid-19 pandemic relief package approved shortly after Biden took office would be recovered. A New York Times analysis suggests the caps will reduce overall federal spending by about $650 billion over a decade — a fraction of the cuts originally sought by Republicans — if spending grows at the expected rate of inflation after the caps are in place. get up in two years.
Defense, Social Security, health care and veterans’ programs would be screened.
The deal would protect the military and rights such as Social Security and health care from spending cuts imposed on other parts of the government. It would also fully fund medical care for veterans, including expanded services for those exposed to toxic fire pits.
The deal would effectively preserve the substantial increases won by the Biden administration over the past two years in areas such as funding for Title I education for low-income students, grants for child care and development, research on the cancer and other priorities of the president. It would leave Mr. Biden’s efforts to forgive $400 billion in student loan debt over the next few decades intact, though that faces a challenge in the Supreme Court. But it would include none of the tax hikes on the wealthy and corporations that Mr. Biden sought in his original budget proposal.
Some recipients of government assistance would face new job demands.
New work requirements, including food stamps and the Temporary Assistance Program for Needy Families, would be imposed on some government aid recipients. Among other things, the deal would limit how long childless people under 54 could receive food stamps, though those limits would expire in 2030 if not renewed by Congress. The package would also expand access to food stamps for veterans and the homeless.
Large energy projects would be granted a simplified review process.
Environmental permits for large energy projects would be simplified. A single lead agency would be charged with developing a single review document according to a public timeline. The agreement would implement these changes without limiting the overall scope of the current review process by reducing statute of limitations, imposing barriers to legal standing, or eliminating injunctive or other judicial remedies.